Wednesday, June 12, 2019

Item Receipt Displays with a Negative Cost on Inventory Profitability Report

These negative costs may come from transactions whose COGS accounts were posted on the credit side of the GL. 

The Cost column of the Profitability report is driven by transactions which post to COGS account. Costs like expenses are typically debited as they are incurred. However, if a COGS account is credited instead, it reverses the sign because it is a deduction to cost.

For example: 

An item receipt was calculated with a Purchase Price Variance and the account user selected in the Purchase Price Variance field (under the Accounting tab of the item record) is a COGS type of account.

Debit: Inventory Received Not Billed __________$10.00
Credit: Purchase Price Variance – COGS _________$10.00

Once a transaction for an item posts to COGS account it is inevitable that a $10.00 will display under the Cost column of the report. But because the COGS account is credited, it will appear as negative to show that this is a deduction to item's cost.

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